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Corporate Tax

Corporate Tax of UAE

As businesses in the UAE prepare for the implementation of Corporate Tax, it's essential to stay ahead of the curve. Although the UAE Corporate Tax Law is yet to be finalized, the Ministry of Finance (MoF) has provided guidelines to help businesses begin their preparations. At AARMAK, we offer expert corporate tax services to help companies understand their tax obligations, ensuring compliance with the new regulations.

Our services include assessing the applicability of corporate tax to businesses in both the mainland and Free Zones, preparing financial records, and advising on key aspects like tax rates, exempted income, carry-forward losses, group company transactions, and allowable expenses. By staying informed about corporate tax requirements, businesses can avoid penalties, protect their reputation, and build trust with stakeholders.

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1. Applicable Corporate Tax Rates
The UAE’s corporate tax rates are among the most competitive in the region. Understanding the applicable rate is crucial for effective planning:

◉ 0%: For taxable income up to AED 375,000
◉ 9%: For taxable income exceeding AED 375,000
2. Who Falls Under UAE Corporate Tax?
Corporate tax in the UAE applies to both natural and legal persons engaged in business activities. This includes:

◉ Natural Persons: Sole proprietors and partners in unincorporated partnerships carrying out business activities in the UAE.
◉ Legal Persons: UAE-based companies such as LLCs, PSCs, PJSCs, and foreign legal entities with a permanent establishment in the UAE.
3. Exempted Entities
Certain entities are exempt from corporate tax, including:

◉ UAE Federal and Emirate-level governments and their departments.
◉ UAE government-owned companies engaged in sovereign activities.
◉ Natural resource extraction companies taxed at the Emirate level.
◉ Charities and public benefit organizations listed in a Cabinet decision.
◉ Pension funds and qualifying investment funds.
4. Corporate Tax in Free Zones
Free Zone businesses fall within the scope of corporate tax but may still enjoy tax incentives if they meet regulatory requirements. Companies that comply with conditions, such as engaging in transactions outside the UAE or with other Free Zone entities, can benefit from a 0% corporate tax rate. However, mainland branches of Free Zone companies will be subject to a 9% rate on their mainland income.
5. Resident and Non-Resident Entities
Businesses are considered residents for corporate tax purposes if they are incorporated in the UAE or have their management and control based in the UAE. Non-residents will be taxed on income earned from their UAE permanent establishments and UAE-sourced income.
6. Taxable Income Calculation
Taxable income is calculated using the accounting net profit as per financial statements prepared in line with IFRS. However, alternative standards may be used to reduce compliance costs, especially for SMEs.
7. Exempted Income
Exempted income includes:

◉ Dividends received and capital gains from UAE subsidiaries.
◉ Domestic dividends from UAE companies.
◉ Foreign dividends and capital gains that meet certain conditions.
8. Tax Groups
A group of UAE-resident companies can form a tax group, treated as a single taxable entity, provided the parent company holds at least 95% of the subsidiary’s shares and voting rights.

UAE Corporate Tax Services Offered by AARMAK

With the introduction of corporate tax in the UAE, companies must ensure compliance with the new laws. AARMAK’s comprehensive corporate tax services include:

At AARMAK, our team of highly qualified chartered accountants and tax advisors is well-versed in UAE tax law. With a proven track record of helping businesses comply with VAT and Excise Tax, we are your trusted partner for corporate tax compliance.

Contact AARMAK today to ensure your business is ready for corporate tax in the UAE.

AARMAK, with 20 years in Dubai, offers expert auditing, accounting, taxation, AML consulting, trademark registration, and business setup services. We ensure compliance and drive efficient business growth.

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